The Online Value Proposition (OVP)
Introduction
If organisations want to maximise usage of online channels
(web, e-mail and wireless or interactive digital TV where relevant), my view is
that a distinct, detailed online value proposition (OVP) must be developed for
the target audiences. The key word here is distinct – the online proposition should
not simply replicate the existing service proposition or brand promise that it
is available from offline channels, but it should extend it to offer unique online
benefits.
Contrast this with the approach many companies have taken
which is simply to transfer their existing proposition to the online environment.
The worst manifestation of this is the simple ‘brochureware’ sites which offer
little more than an introduction to “who we are, what we do and where to find
us” or sometimes simply “these are our products – take them or leave them”. This
approach fails to take advantage of the unique properties of the online media
such as its immediacy, interactivity and depth of content that is only limited
by imagination and resource.
Once an OVP has been defined, e-marketers then need to work
hard to clearly communicate this proposition online and offline. Furthermore,
as for any proposition, they need to evaluate how well it resonates with its audiences
and revise it accordingly. So, part of proposition development is identification
of powerful messages to convey the proposition. Using both online and offline
communications to build usage of online channels will be ineffectual if the messaging
is the all-too-common “Visit our web site @ http://www.company.com/”
or “Sign-up for our e-newsletter”!
This article starts with current thinking on developing customer
value propositions for brands and then describes the characteristics of a strong
online value proposition and explores approaches to define and refine the OVP.
Note: In WNIM Issue 29, we introduced my top ten corporate
issues of e-marketing (http://www.wnim.com/archive/issue2804/emarketing.htm).
In this e-newsletter and subsequent e-newsletters, we will explore some of these
issues in more detail.
What is a customer value proposition?
Development of a clear customer value proposition is now an
integral part of customer-centric marketing, customer-relationship management
and branding. A conventional view of the value proposition is provided by Knox
et al. (2003) in their review of approaches to customer relationship management.
They say a value proposition is:
“an offer defined in terms of the target customers, the benefits
offered to these customers, and the price charged relative to the competition.”
Similarly, Rayport and Jaworski (2004) suggest that construction
of a value proposition requires consideration of (1) Target segments, (2) Focal
customer benefits, (3) Resources to deliver the benefits package in a superior
manner to competitors. However, branding advocates believe that the value proposition
is more than the sum of product features, prices and benefits. They argue that
it also encompasses the totality of the experience that the customer has when
selecting, purchasing and using the product. We will see that these customer experiences
and also service quality are very important online. For example, Molineux (2002)
states that:
“the value proposition describes the total customer experience
with the firm and in its alliance partners over time, rather than [being limited
to] that communicated at the point of sale”.
Similarly, Smith and Wheeler (2002) consider that designing
what they refer to as a ‘branded customer experience’ is vital to delivering an
effective value proposition. They also stress the importance of “developing a
profound understanding of the customer’s experience”. The watch word here, is
profound – they suggest that detailed research must determine the nature of value
which drive buying and loyalty behaviour.
From this rapid review of the fundamentals of customer value
propositions, we can summarise the following success factors for developing an
effective online value proposition:
1. The offer forming the OVP is developed specifically for
different target customer segments.
2. The OVP is not limited to the customer experience on-site
but involves how it links to other channels as part of a multi-channel buying
process.
3. The product or service offer and experience that form the
OVP must be based on in-depth research of which factors govern purchase and loyalty
behaviour and refined according to actual experience of the OVP by customers.
What is an online value proposition?
From our review of the essence of customer value propositions,
we can suggest that the issues to be considered when formulating an online value
proposition should include:
- Identification of a clear differentiation of the online proposition
compared to the companies conventional offline proposition, i.e. to extend the
offline proposition.
- Identification of a clear differentiation of the online proposition
from competitors based on cost, product innovation or service quality.
- Target market segment(s) that the proposition will appeal
to.
- How the proposition will be communicated to site visitors
and in all marketing communications. Developing a strap line can help this; we
will look at some examples shortly.
- How the proposition will be delivered across different parts
of the buying process, i.e. it should not just refer to the product itself, but
also give an indication of the pre-sales and post-sales support that can be provided
by the online service.
- How the proposition will be delivered and supported by resources
– is the proposition genuine? Will resources be internal or external?
To summarise, the ‘Online Value Proposition’ or OVP should:
- Reinforce core brand proposition and credibility, but
also show:
- What can a visitor get from your online services that…
- They can’t get from you offline?
- They can’t get from competitors?
Benefits of an online value proposition
Varianini and Vaturi (2000) conducted a review of failures
in B2C dot-com retailers in order to highlight lessons that can be learned. They
believe that many of the problems have resulted from a failure to apply established
marketing orientation approaches including definition and communication of a clear
value proposition. They summarise their guidelines as follows:
“First identify customer needs and define a distinctive value
proposition that will meet them, at a profit. The value proposition must then
be delivered through the right product and service and the right channels, and
it must be communicated consistently. The ultimate aim is to build a strong, long-lasting
brand that delivers value to the company marketing it”.
Similarly, Agrawal et al. (2001) suggest that the success
of leading e-commerce companies is often due to matching value propositions to
segments successfully.
Having a clear online value proposition has several benefits:
- It helps distinguish an e-commerce site from its competitors
(this should be a web site design objective).
- It helps provide a focus to marketing efforts and enables
company staff to be clear about the purpose of the site.
- If the proposition is clear it can be used for PR and word-of-mouth
recommendations may be made about the company. For example, the clear proposition
of Amazon on its site is that prices are reduced by up to 40 per cent and that
a wide range of three million titles is available.
- It can be linked to the normal product propositions of a
company or its product.
A further practical reason for developing an OVP is that customers
expect it! Research reported by Jakob Nielsen shows that new visitors to a site,
particularly of a company they are unfamiliar with, will seek out a tagline or
graphic that explains what the site can offer (WIFM – or What’s in It For Me).
Users decide quickly (often within a few seconds whether to stay or leave a site
and the tagline is a large part of this). Indeed, in 2003 for UK financial services
provider egg, their tagline was ‘egg: what’s in it for me?’
Formulating an OVP
It follows from our exploration of what comprises a value
proposition, that to create a successful online value proposition, marketers must
understand specific characteristics of online channels and the benefits they offer
to customers. To help formulate the OVP we need to consider the special characteristics
of the Internet and its online services as perceived by customers using them.
A simple mnemonic is provided by these “Six C s” which have been used in varying
combinations since the Internet has become a channel to market:
1) Content – In the beginning it was said that ‘Content
is King’. Well content is still King, it’s just that I don’t think enough attention
is given to precisely which ‘Content is King’. To my mind, regal content is rich,
which means it provides something that other channels can’t. Often this means
more detailed, in-depth information to support the buying process or product usage.
However, often online product catalogues simply replicate what is in offline catalogues
without adding extra information, images or example applications. Messaging through
E-mail, SMS and RSS is also key to providing unique content – these media can
be used to deliver timely, relevant media to individuals.
As well as text-based content which is king for business-to-business there is
also interactive content which is king for consumer sites and particularly brands.
Consumer FMCG brands now use the web to deliver what they term as ‘Digital assets’
which support offline branding campaign. For example, 2004 New Media Age winner
Dare in it’s creative for Lynx used online games, screensavers, viral e-mails,
video clips and soundtracks to extend the brand experience from applying deodorant
to interacting with the brand for 1.4 million unique users. (http://www.newmediazero.com/awards04/category.aspx?cat=advertising).
Connections to content on other sites is important for many sites since links
to relevant resources on other destination sites can improve the customer experience
on the referring (original site).
2) Customisation – In this case mass customisation
of content whether received as web site pages or e-mail alerts and commonly known
as personalisation. Of course, Amazon is quoted ad-nauseum as an example of this,
but did you know that they see it as so important, they actually have a “Director
of Personalisation”. At the 2004 London E-metrics summit I listened to a presentation
by Matt Pound and was amazed how much Amazon does customise. In addition to the
standard “customers who bought this product also bought that product” approach
Amazon also automates creation of standard messages on-screen delivered in different
slots or portlets, E-mail messages and Search engine adverts. The ability for
a subscriber to an online e-mail service to tailor their messages by selectively
opting-in to particular types of message is a further example of customisation.
3) Community – Last and probably least is Community,
these days known as ‘social networks’. Online channels such as the Internet are
known as ‘many-to-many’ media, meaning that your audiences can contribute to the
content. For consumer retail, review sites such as Epinions (http://www.epinions.com/)
and Ciao (http://www.ciao.co.uk/) are important
to informing customer perceptions of brands. Similarly in business markets some
specialist communities have been set up. For example, E-consultancy (http://www.e-consultancy.com/)
has forums and reviews which discuss issues in the supply of e-business services.
However, such community services are typically independent from suppliers of products
and services, and it is more difficult to build in these services into product
supplier sites since comments made by customers may damage the brand. Supplier
community sites were in vogue around 2000 at the time the Cluetrain manifesto
(http://www.cluetrain.net/) was launched
with companies such as Egg with their Egg Free Zone and Symantec with sharing
customer queries and solutions. However, such communities services have now been
closed down, presumably because of the difficulty in controlling the negative
perceptions they can engender.
4) Convenience – This is the ability to select, purchase
and in some cases use products, from your desktop at any time; the classic 24
X 7 X 365 availability of a service. Online usage of products is, of course restricted
to digital products such as music or other data services. Amazon has advertised
offline using creative showing a Christmas shopper battling against a gale swept
street clutching several bags to reinforce the convenience message.
5) Choice – The web gives a wider choice of products
and suppliers than via conventional distribution channels. The success of online
intermediaries such as Kelkoo (http://www.kelkoo.com/)
and Screentrade (http://www.screentrade.com/)
is evidence of this. Similarly Tesco.com provides Tesco with a platform to give
consumers a wider choice of products (financial, travel, white goods) with more
detailed information than is physically available in store.
6) Cost reduction – The Internet is widely perceived
as a relatively low-cost place of purchase. In the UK, Vauxhall have keyed into
this perception by offering Vauxhall Internet Price (VIP), in other words lower
prices than through dealer-based distribution. Similarly a key component of the
easyJet OVP when it launched was single tickets that were £2.50 cheaper than phone
bookings. This simple price differential together with the limited change behaviour
required from phone booking to online booking has been a key factor in the easyJet
online ticketing channel effectively replacing all other booking modes.
Note, the 7Cs of Rayport and Jaworki (2003) provides a similar
framework of Context, Content, Community, Customisation, Communication, Connection
and Commerce.
An alternative, more classical method of reviewing how the
proposition can be extended online is to consider how the marketing mix can be
varied online. For example in the content of the above list:
- Product (Content, Customisation, Community) – Providing
new digital services via web sites and e-mail to extend or tailor the product.
- Price (Cost reduction) – Offering differential prices
– typically lower online, but maybe higher if the Convenience and Content factors
are favourable. For example, the London Eye now offers a 5% discount for online
booking, but in the past it has charged a premium since it was more convenient
than phone.
- Place – Online provides a new place and a new channel
– simple!
- Promotion – in addition to providing a number of new
methods for customer acquisition through search engines, affiliates and e-mail
for example, the web is at its best when unique web offers are available in the
form of competitions and sales promotion.
- Physical evidence, People, Process (Providing new
forms of customer service such as the in-depth frequently asked questions database
at http://www.easyjet.com/). These elements
of the mix are very important to the overall experience. Indeed Jeff Bezos of
Amazon has said (quoted by Smith and Wheeler (2002) that:
“Customer service is a critical success factor in any retail business, but
it’s absolutely critical online”
Fulfilment is critical for online retail sites, but for all sites there are other
aspects of customer service that are important to all companies with an online
presence – not just retailers. These include response times to e-mail or phone
enquires and the availability (percentage of time site is up and running) and
download performance of sites. It often seems as if sometimes these parts of the
experience are underestimated. Services such as Site Confidence (http://www.siteconfidence.co.uk/company/benchmarks/top100.php)
show that there is a large variance between the fastest and the slowest sites,
but users will tend to compare their satisfaction with their current site against
the fastest.
Some examples of companies who have developed a successful
online value proposition are described by Smith and Wheeler (2002) who they place
in the context of their ‘Branded Customer Experience’:
1. Consistent…reliable and trustworthy delivery of the
customer experience across channels. Example: First Direct.
2. Intentional…using new mediums to create new value.
Example: Tesco.com.
3. Differentiated…uniquely offering a customer experience
that is different from the ones that competitors offer. Example: Egg.
4. Valuable…creating new value in different ways. Examples:
BBC.com and Smarterkids.com
Formulation of online propositions for different target audiences
It seems that many OVPs are “one size fits all” i.e. on the
web site or offline communications it is the same messaging and content for all.
Although this may be appropriate for smaller organisations, it is a missed opportunity
for larger organisations. Here are some examples of approaches that companies
have used to develop different propositions for different audiences.
- Dell (http://www.dell.com/)
Main navigation method is customer self-selection by consumer or organisation
type (company size and private or public sector). Different messaging and product
offerings are developed for each audience.
- Boosey and Hawkes (http://www.boosey.com/).
This music publisher has different positioning messages for different audiences,
e.g. making music (for ‘information resources, music and shopping for all musicians
from beginner to professional’); learning music (‘resources to help you learn
music from tutor books to software’); teaching music (‘education resources, information,
entertainment and shopping for any one who teaches music’); composers and repertoire
(‘specialist resources for programmers, performers, broadcasters, librarians and
the home of contemporary music on the web’).
- Siebel (http://www.siebel.com/)
Siebel connects with different decision makers in organisations by providing a
resource library with many whitepapers which will appeal to different members
of the buying unit such as CEO, CFO, CMO and CIO.
- House (http://www.house.co.uk/)
Clearly explains its core proposition – British Gas welcomes you to house – It’s
where the experts live! Find the advice and services you need to help you run
your home smoothly. Then the calls-to-action on the home page showcase the proposition
by highlighting financial savings (‘paperless billing could save you £15 a year’),
special offers and a primary navigation system which is task-based and based on
action verbs, i.e. ‘Fix a problem’, ‘Improve your home’, ‘manage your info’, ‘move
home’, ‘manage your bills’ and ‘protect your home’.
Customer-scenario based proposition development
A practical design approach to developing detailed customer-centric
propositions for different audiences is the customer scenario design approach.
This concept was popularised by Patricia Seybold (Seybold, 2001), but was based
on earlier task-based approaches used for designing web site usability (see for
example van Duyne et al. (2002) for a description). This concept involves creating
personas or thumbnails for different audience members and then to describe their
tasks or experiences they are looking for when visiting a web site. For example,
for a music publisher such as Boosey & Hawkes, two of the personas and a scenario
for each might be as follows:
Persona 1:
George is a 45 year old violin teacher who has used the Internet
for less than a year. He accesses the Internet from home over a dial-up connection.
He has never purchased online before, preferring to place orders by phone.
Scenario A:
He is looking to purchase sheet music suitable for beginners.
Persona 2:
Georgina is a 29 year old ad exec who has been using the Internet
for 5 years.
Scenario B:
She wants to research music suitable for a new sports car
advert before licensing or purchasing the chosen track. She has used a search
engine to arrive at the site and is not familiar with the company.
Content and services to support each persona in their tasks
can then be developed. The scenarios can then be used to test the effectiveness
of new designs in focus groups.
A related approach is the Egg diagram approach of Rayport
and Jaworski (2004). They suggest companies can benchmark their online proposition
against competitors by filling an egg diagram that shows content available to
support Pre-purchase (Problem recognition, Information search, evaluation of the
alternatives), Purchase and Post-purchase (Satisfaction, Loyalty).
Examples of online value proposition messaging
At its simplest, the OVP can be communicated with a simple
tag line which is prominent on the home page and in offline communications accompanying
the URL. The tagline should simply explain the essence of what is provided by
a brand online. Some of the best taglines have been developed by the startup companies,
for example:
Of course, graphics, features and benefits lists and the content
itself all can help communicate the OVP.
The Citibank design (http://www.citibank.com/)
uses a range of techniques to illustrate its core proposition and OVP. The main
messages are:
Welcome to Citibank: The one-stop solution for all your financial
needs.
Look for a product or service; Learn about a financial product;
Find a location.
Different OVPs can be developed for different products or
different segments.
For Citibank UK, the OVP for its Internet banking service is: “Bank whenever
you want, from wherever you are Citibank Internet Banking gives you the freedom
and flexibility to manage your day-to-day finances. It's secure, convenient and
very easy to use”.
Tagline guidelines
In his Alertbox ‘Tagline Blues: What's the Site About?’
http://www.useit.com/alertbox/20010722.html
Jakob Nielsen suggests:
‘To assess whether your homepage communicates effectively
to visitors in the crucial first 10 seconds, follow two simple guidelines:
First, collect the taglines from your own site and your three
strongest competitors. Print them in a bulleted list without identifying the company
names. Ask yourself whether you can tell which company does what. More important,
ask a handful of people outside your company the same question.
Second, look at how you present the company in the main copy
on the home page. Rewrite the text to say exactly the opposite. Would any company
ever say that? If not, you're not saying much with your copy, either.’
http://www.useit.com/alertbox/20010722.html
But the communication of the OVP should not end with the tag-line.
More detailed explanations of the benefits of using the OVP can be communicated:
- On the homepage through feature lists or imagery that shows
the benefits or experiences that are available
- In the About Us section
- In the Contact Us section
- In the Help section
- In the e-newsletter archive
- In Frequently Asked Questions
First-time users of web sites commonly turn to the About Us,
Contact Us and Help sections, so these are popular pages where it is important
to detail the OVP through listing features and benefits.
In offline communications too, the OVP can be explained in
more depth to encourage usage of the channel. Product catalogues from holiday
home companies or computer manufacturers often use at least one page to showcase
the OVP. Banks may use communications in branch, phone or by direct mail to explain
the OVP thus reinforcing the messaging across media.
Evaluating proposition delivery
At the start of the article I suggested the need for continuous
refinement of the OVP and ongoing checks that it is delivering the right experience.
Financial services brands such as Egg, IF and Deutsch Bank have rolling surveys
where tens of thousands of consumers are surveyed through e-mail each month. Tesco.com
send out an e-mail survey immediately after the first online shop to check consumers
are happy with the experience, and in so doing, improve the experience further.
Even having a simple feedback button can help alert the brand owner to problems
with the site. IF receives hundreds of comments a month through an online feedback
box, so that recurring issues can be acted upon. Hygiene factors such as site
performance and availability should also be monitored and controlled through service
level agreements with a hosting provider. One of the main metrics Amazon use to
assess practical problems with their OVP delivery is revenue per minute. For the
2003 revenue of $5.7 billion I estimate this means that the alarm bells start
ringing in the Amazon operations control centre when this KPI falls below $10,000
per minute!
In next months article we continue the branding theme, when
we will look at how classical models of branding can be applied to an organisations
online presence to support the brand.
References
Agrawal, V., Arjona, V. and Lemmens, R. (2001) E-performance:
the path to rational exuberance. Mckinsey Quarterly, No 1. 31-43.
van Duyne, D., Landay, J. Hong, J. (2001) The Design of Sites.
Patterns, Principles, and Processes for Crafting a Customer-Centered Web Experience.
Addison-Wesley, Reading, MA.
Knox, S., Maklan, S., Payne, A., Peppard, J. and Ryals, L.
(2003) Customer Relationship Management: Perspectives from the Marketplace. Butterworth
Heineman, Oxford, UK.
Molineux, P. (2002) Exploiting CRM. Connecting with customers.
Hodder & Stoughton, London, UK.
Nielsen (2001) Tagline Blues: What's the Site About? Alertbox,
July 22, 2001
http://www.useit.com/alertbox/20010722.html.
See also: About Us – Presenting information about an organisation on its web site:
http://www.useit.com/alertbox/20031027.html.
Rayport, J. and Jaworski, B. (2004) Introduction to E-commerce.
McGraw-Hill, NY, NY. 2nd edition.
Seybold, P. (2001) Get inside the lives of your customers.
Harvard Business Review. May 2001, pp80-89.
Smith, S. and Wheeler, J. (2002) Managing the Customer
Experience. FT-Prentice Hall. Harlow, UK.
Varianini, V. and Vaturi, D. (2000) Marketing lessons from
e-failures. McKinsey Quarterly, No 4. pp86-97.
About the author
Dr Dave Chaffey is workshop leader for a range of one-day
e-marketing training workshops from the CIM:
E-mail Marketing (www.cim.co.uk/0766)
E-CRM Planning (www.cim.co.uk/1137)
Marketing Research Using the Internet (www.cim.co.uk/1135)
Running Effective E-marketing Campaigns (www.cim.co.uk/0767)
Improving E-marketing Performance (www.cim.co.uk/1138)
Go to http://www.cimtraining.com/
for course details and online booking.
Dave Chaffey, trainer and consultant for Marketing Insights
Limited (http://www.marketing-insights.co.uk/)
is a prolific e-business author with ‘Total E-mail Marketing’ and the second
editions of ‘Internet marketing: Strategy, Implementation and Practice’
and E-business and E-commerce Management new in 2003. Dave is also an
examiner of the CIM E-marketing Professional Development Award. A web site at
http://www.marketing-online.co.uk/
supports the workshops and books with over 400 marketing related links.
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